Note 25 - Supplemental Guarantor Information

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Supplemental Guarantor Information [Text Block]

25. Supplemental Guarantor Information

Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by the following subsidiaries (collectively, the "Guarantor Subsidiaries"), which are 100%-owned subsidiaries of the Company.

● M.D.C. Land Corporation

● RAH of Florida, Inc.

● Richmond American Construction, Inc.

● Richmond American Homes of Arizona, Inc.

● Richmond American Homes of Colorado, Inc.

● Richmond American Homes of Florida, LP

● Richmond American Homes of Illinois, Inc.

● Richmond American Homes of Maryland, Inc.

● Richmond American Homes of Nevada, Inc.

● Richmond American Homes of New Jersey, Inc.

● Richmond American Homes of Oregon, Inc.

● Richmond American Homes of Pennsylvania, Inc.

● Richmond American Homes of Utah, Inc.

● Richmond American Homes of Virginia, Inc.

● Richmond American Homes of Washington, Inc.

The senior note indentures do not provide for a suspension of the guarantees, but do provide that any Guarantor may be released from its guarantee so long as (1) no default or event of default exists or would result from release of such guarantee, (2) the Guarantor being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (3) the Guarantors released from their guarantees in any year-end period comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (4) such release would not have a material adverse effect on the homebuilding business of the Company and its subsidiaries and (5) the Guarantor is released from its guarantee(s) under all Specified Indebtedness (other than by reason of payment under its guarantee of Specified Indebtedness). Upon delivery of an officers’ certificate and an opinion of counsel stating that all conditions precedent provided for in the indenture relating to such transactions have been complied with and the release is authorized, the guarantee will be automatically and unconditionally released. “Specified Indebtedness” means indebtedness under the senior notes, the Company’s Indenture dated as of December 3, 2002, the Revolving Credit Facility, and any refinancing, extension, renewal or replacement of any of the foregoing.

We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor and Non-Guarantor Subsidiaries is presented below.

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Balance Sheet

	December 31, 2019
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	Dollars in thousands
ASSETS
Homebuilding:
Cash and cash equivalents	$	418,822	$	5,364	$	-	$	-		$	424,186
Marketable securities		-		-		-		-			-
Restricted cash		-		14,279		-		-			14,279
Trade and other receivables		624		65,205		-		-			65,829
Inventories:
Housing completed or under construction		-		1,036,191		-		-			1,036,191
Land and land under development		-		1,330,384		-		-			1,330,384
Total inventories		-		2,366,575		-		-			2,366,575
Intercompany receivables		1,936,075		6,370		-		(1,942,445	)		-
Investment in subsidiaries		488,993		-		-		(488,993	)		-
Property and equipment, net		23,192		37,222		-		-			60,414
Deferred tax assets, net		22,508		-		-		(740	)		21,768
Other assets		34,728		43,630		-		-			78,358
Total Homebuilding Assets		2,924,942		2,538,645		-		(2,432,178	)		3,031,409
Financial Services:
Cash and cash equivalents		-		-		35,747		-			35,747
Marketable securities		-		-		56,747		-			56,747
Intercompany receivables		-		-		47,753		(47,753	)		-
Mortgage loans held-for-sale, net		-		-		197,021		-			197,021
Other assets		-		-		16,692		740			17,432
Total Financial Services Assets		-		-		353,960		(47,013	)		306,947
Total Assets	$	2,924,942	$	2,538,645	$	353,960	$	(2,479,191	)	$	3,338,356
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	289	$	87,075	$	-	$	-		$	87,364
Accrued and other liabilities		84,088		156,652		-		5,200			245,940
Advances and notes payable to parent and subsidiaries		53,658		1,912,969		-		(1,966,627	)		-
Revolving credit facility		15,000		-		-		-			15,000
Senior notes, net		989,422		-		-		-			989,422
Total Homebuilding Liabilities		1,142,457		2,156,696		-		(1,961,427	)		1,337,726
Financial Services:
Accounts payable and accrued liabilities		-		-		73,729		(5,200	)		68,529
Advances and notes payable to parent and subsidiaries		-		-		23,571		(23,571	)		-
Mortgage repurchase facility		-		-		149,616		-			149,616
Total Financial Services Liabilities		-		-		246,916		(28,771	)		218,145
Total Liabilities		1,142,457		2,156,696		246,916		(1,990,198	)		1,555,871
Equity:
Total Stockholders' Equity		1,782,485		381,949		107,044		(488,993	)		1,782,485
Total Liabilities and Stockholders' Equity	$	2,924,942	$	2,538,645	$	353,960	$	(2,479,191	)	$	3,338,356

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Balance Sheet

	December 31, 2018
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	410,127	$	4,597	$	-	$	-		$	414,724
Marketable securities		-		-		-		-			-
Restricted cash		-		6,363		-		-			6,363
Trade and other receivables		758		52,224		-		-			52,982
Inventories:
Housing completed or under construction		-		952,436		-		-			952,436
Land and land under development		-		1,180,558		-		-			1,180,558
Total inventories		-		2,132,994		-		-			2,132,994
Intercompany receivables		1,735,342		7,369		-		(1,742,711	)		-
Investment in subsidiaries		455,848		-		-		(455,848	)		-
Property and equipment, net		23,896		34,271		-		-			58,167
Deferred tax assets, net		36,168		-		-		1,010			37,178
Other assets, net		12,234		33,560		-		-			45,794
Total Homebuilding Assets		2,674,373		2,271,378		-		(2,197,549	)		2,748,202
Financial Services:
Cash and cash equivalents		-		-		49,052		-			49,052
Marketable securities		-		-		40,879		-			40,879
Intercompany receivables		-		-		22,346		(22,346	)		-
Mortgage loans held-for-sale, net		-		-		149,211		-			149,211
Other assets, net		-		-		14,743		(1,010	)		13,733
Total Financial Services Assets		-		-		276,231		(23,356	)		252,875
Total Assets	$	2,674,373	$	2,271,378	$	276,231	$	(2,220,905	)	$	3,001,077
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	50,505	$	-	$	-		$	50,505
Accrued and other liabilities		65,691		125,387		-		5,169			196,247
Advances and notes payable to parent and subsidiaries		29,715		1,727,248		295		(1,757,258	)		-
Revolving credit facility		15,000		-		-		-			15,000
Senior notes, net		987,967		-		-		-			987,967
Total Homebuilding Liabilities		1,098,373		1,903,140		295		(1,752,089	)		1,249,719
Financial Services:
Accounts payable and accrued liabilities		-		-		63,712		(5,169	)		58,543
Advances and notes payable to parent and subsidiaries		-		-		7,799		(7,799	)		-
Mortgage repurchase facility		-		-		116,815		-			116,815
Total Financial Services Liabilities		-		-		188,326		(12,968	)		175,358
Total Liabilities		1,098,373		1,903,140		188,621		(1,765,057	)		1,425,077
Equity:
Total Stockholders' Equity		1,576,000		368,238		87,610		(455,848	)		1,576,000
Total Liabilities and Stockholders' Equity	$	2,674,373	$	2,271,378	$	276,231	$	(2,220,905	)	$	3,001,077

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Statements of Operations and Comprehensive Income

	Year Ended December 31, 2019
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	3,205,248		$	-		$	-		$	3,205,248
Cost of Sales		-			(2,600,196	)		-			-			(2,600,196	)
Inventory impairments		-			(935	)		-			-			(935	)
Gross margin		-			604,117			-			-			604,117
Selling, general, and administrative expenses		(71,720	)		(290,507	)		-			(563	)		(362,790	)
Equity income of subsidiaries		286,606			-			-			(286,606	)		-
Interest and other income		8,996			1,242			-			(1,168	)		9,070
Other expense		30			(5,665	)		-			-			(5,635	)
Homebuilding pretax income (loss)		223,912			309,187			-			(288,337	)		244,762
Financial Services:
Financial services pretax income		-			-			58,496			1,731			60,227
Income before income taxes		223,912			309,187			58,496			(286,606	)		304,989
Provision for income taxes		14,400			(67,595	)		(13,482	)		-			(66,677	)
Net income	$	238,312		$	241,592		$	45,014		$	(286,606	)	$	238,312
Other comprehensive income related to available-for-sale securities, net of tax		-			-			-			-			-
Comprehensive income	$	238,312		$	241,592		$	45,014		$	(286,606	)	$	238,312

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Statements of Operations and Comprehensive Income

	Year Ended December 31, 2018
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	2,981,811		$	-		$	-		$	2,981,811
Cost of Sales		-			(2,415,139	)		-			-			(2,415,139	)
Inventory impairments		-			(21,850	)		-			-			(21,850	)
Gross margin		-			544,822			-			-			544,822
Selling, general, and administrative expenses		(64,824	)		(264,475	)		-			(502	)		(329,801	)
Equity income of subsidiaries		254,723			-			-			(254,723	)		-
Interest and other income		7,843			1,029			4			(1,158	)		7,718
Other expense		30			(5,275	)		-			-			(5,245	)
Homebuilding pretax income (loss)		197,772			276,101			4			(256,383	)		217,494
Financial Services:
Financial services pretax income		-			-			44,700			1,660			46,360
Income before income taxes		197,772			276,101			44,704			(254,723	)		263,854
Provision for income taxes		13,008			(55,539	)		(10,543	)		-			(53,074	)
Net income	$	210,780		$	220,562		$	34,161		$	(254,723	)	$	210,780
Other comprehensive income related to available-for-sale securities, net of tax		-			-			-			-			-
Comprehensive income	$	210,780		$	220,562		$	34,161		$	(254,723	)	$	210,780

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Statements of Operations and Comprehensive Income

	Year Ended December 31, 2017
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	2,503,242		$	-		$	-		$	2,503,242
Cost of Sales		-			(2,078,371	)		98			-			(2,078,273	)
Inventory impairments		-			(10,010	)		-			-			(10,010	)
Gross margin		-			414,861			98			-			414,959
Selling, general, and administrative expenses		(52,252	)		(234,430	)		-			(806	)		(287,488	)
Equity income of subsidiaries		144,190			-			-			(144,190	)		-
Interest and other income		59,042			2,834			6			(546	)		61,336
Other expense		(30	)		(2,838	)		-			-			(2,868	)
Homebuilding pretax income (loss)		150,950			180,427			104			(145,542	)		185,939
Financial Services:
Financial services pretax income		-			-			42,441			1,352			43,793
Income before income taxes		150,950			180,427			42,545			(144,190	)		229,732
Provision for income taxes		(9,115	)		(64,051	)		(14,731	)		-			(87,897	)
Net income	$	141,835		$	116,376		$	27,814		$	(144,190	)	$	141,835
Other comprehensive income related to available-for-sale securities, net of tax		(18,079	)		-			3,382			(3,382	)		(18,079	)
Comprehensive income	$	123,756		$	116,376		$	31,196		$	(147,572	)	$	123,756

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Statement of Cash Flows

	Year Ended December 31, 2019
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(9,997	)	$	74,134		$	(6,304	)	$	-		$	57,833
Net cash provided by (used in) investing activities		76,468			(23,833	)		(4,149	)		(77,271	)		(28,785	)
Financing activities:
Payments from (advances to) subsidiaries		-			(41,618	)		(35,653	)		77,271			-
Advances on mortgage repurchase facility, net		-			-			32,801			-			32,801
Dividend payments		(73,117	)		-			-			-			(73,117	)
Issuance of shares under stock-based compensation programs, net		15,341			-			-			-			15,341
Net cash provided by (used in) financing activities		(57,776	)		(41,618	)		(2,852	)		77,271			(24,975	)
Net increase (decrease) in cash and cash equivalents		8,695			8,683			(13,305	)		-			4,073
Cash and cash equivalents:
Beginning of period		410,127			10,960			49,052			-			470,139
End of period	$	418,822		$	19,643		$	35,747		$	-		$	474,212

	Year Ended December 31, 2018
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	10,925		$	(47,132	)	$	28,301		$	-		$	(7,906	)
Net cash provided by (used in) investing activities		(8,632	)		(25,415	)		(2,639	)		56,900			20,214
Financing activities:
Payments from (advances to) subsidiaries		-			70,456			(13,556	)		(56,900	)		-
Advances on mortgage repurchase facility, net		-			-			4,475			-			4,475
Dividend payments		(67,718	)		-			-			-			(67,718	)
Payments of deferred financing costs		(3,026	)		-			-			-			(3,026	)
Issuance of shares under stock-based compensation programs, net		9,860			-			-			-			9,860
Net cash provided by (used in) financing activities		(60,884	)		70,456			(9,081	)		(56,900	)		(56,409	)
Net increase (decrease) in cash and cash equivalents		(58,591	)		(2,091	)		16,581			-			(44,101	)
Cash and cash equivalents:
Beginning of period		468,718			13,051			32,471			-			514,240
End of period	$	410,127		$	10,960		$	49,052		$	-		$	470,139

M.D.C. Holdings, Inc.

Supplemental Condensed Combining Statement of Cash Flows

	Year Ended December 31, 2017
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by operating activities	$	30,815		$	8,991		$	30,700		$	-		$	70,506
Net cash provided by (used in) investing activities		80,822			(454	)		(253	)		(22,325	)		57,790
Financing activities:
Payments from (advances to) subsidiaries		-			(2,672	)		(19,653	)		22,325			-
Advances on mortgage repurchase facility, net		-			-			(2,145	)		-			(2,145	)
Proceeds from the issuance of senior notes		146,463			-			-			-			146,463
Dividend payments		(51,897	)		-			-			-			(51,897	)
Excess tax benefit from share-based awards		(2,665	)		-			-			-			(2,665	)
Issuance of shares under stock-based compensation programs, net		9,501			-			-			-			9,501
Net cash provided by (used in) financing activities		101,402			(2,672	)		(21,798	)		22,325			99,257
Net increase in cash and cash equivalents		213,039			5,865			8,649			-			227,553
Cash and cash equivalents:
Beginning of period		255,679			7,186			23,822			-			286,687
End of period	$	468,718		$	13,051		$	32,471		$	-		$	514,240